On Friday, the U.S. dollar is barely losing ground, with market activity quiet ahead of the monthly U.S. jobs report. Meanwhile, the yen is on track for its worst weekly loss in almost a year.

The dollar awaits the jobs report

The dollar has been in a downtrend for most of the week, following comments by Federal Reserve Chairman Jerome Powell, who largely ruled out a rate hike. He implied that the Fed will lean towards an eventual rate cut, although it may take longer than initially expected.

Attention now turns to the monthly U.S. employment report.

The non-farm employment report is likely to show that 238,000 jobs were created last month, down from 303,000 in March, with the unemployment rate holding below 4% for the 27th consecutive month.

Powell emphasized the importance of the upcoming economic data for future monetary policy decisions, following the Fed’s decision to keep interest rates unchanged this Wednesday.

Financial markets still expect the Fed to begin its easing cycle in September, although strong data could challenge this expectation.

Eurozone manufacturing sector remains weak

In Europe, the EUR/USD is up 0.2% to 1.0743, benefiting from the recent weakening of the dollar.

However, the latest data from the eurozone show that France’s industrial production declined by 0.3% month-on-month in March, according to Friday’s release.

European manufacturing remained in contraction in April, according to the latest PMI figures released on Thursday.

The European Central Bank has signaled a possible rate cut in June, although there remains significant uncertainty about future monetary policy.

GBP/USD rose 0.2% to 1.2555 following the release of the UK services PMI figure.

This report indicated the services PMI rose to nearly 55.9 in April, up from 53.1 last month, signaling that the UK’s dominant services sector remains robust, potentially allowing the Bank of England to delay interest rate cuts.

The yen is headed for a significant weekly loss

In Asia, USD/JPY is down 0.2% to 153.26, leaving the pair on track for a weekly loss of around 3%, its biggest loss since December 2022.

This week, Japanese authorities have intervened in the forex market, supporting the yen with interventions totaling 9.16 trillion yen, according to data from the Bank of Japan.

These forex market interventions occurred during periods of low liquidity: one during the holiday closure on Monday and the second late on Wednesday, after Wall Street closed.

Asian currencies were slightly higher, benefiting from the dollar’s overnight decline.

AUD/USD is poised for a 0.3% increase to 0.6579 as markets anticipate potential bullish signals from the Reserve Bank of Australia next week. Higher-than-expected Australian inflation readings have led markets to largely rule out expectations of rate cuts by the Reserve Bank of Australia in 2024, thereby strengthening the Australian dollar.